Strategy Management - Gujrat Electricity Board

8/11/2019 Strategy Management - Gujrat Electricity Board

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INDEX

SR.NO PARTICULARS PAGE NO.

1. Project Name -

2. Declaration -

3. Abbreviations 2-3

4. Introduction 4

5. History of GEB 5

6. Operations of GEB 6

7. Consumer Profile of GEB 7-8

8. Need for Reformation 8-16

Electricity Act 2003 16-19

CERC 18

APDRP 19

9. GEB Transformation Strategies 20-50

HRM in GEB 45-46

Rural Electrification 47-49

Financial Restructuring 49-50

10. Results due to Transformation in GEB 50-51

11. Conclusion 52

12. Glossary 53-54

14.

.

BIBLIOGRAPHY


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ABBREVIATIONS

ABT Availability Based Tariff

APDRP Accelerated Power Development & Reforms

Programme

AT&C Aggregate Technical & Commercial Losses

CAGR Compound Annual Growth Rate

CEA Central Electricity Authority

CEO Chief Executive Officer

CERC Central Electricity Regulatory Commission

CKM Circuit per Kilo Meters

CPP Captive Power Producers

CPSU Central Public Sector UndertakingsDGVCL Dakshin Gujarat Vij Company Ltd

DSCVO Director of Security & Chief VigilanceOfficer

DT Distribution Transformers

EFC Eleventh Finance Commission

ERP Enterprise Resource Planning

FRP Financial Restructuring Plan

GEB Gujarat Electricity Board

GERC Gujarat Electricity Regulatory Commission

GETCO Gujarat Energy Transmission CorporationLimited

GIS Geographical Information System

GSECL Gujarat State Electricity CorporationLimited

GUVNL Gujarat Urja Vikas Nigam Ltd

HT High Tension

IEGC Indian Electricity Grid Code

IPP Independent Power Producers

JE Junior Engineer

JGY Jyoti Gram Yojana

KPI Key Performance Indicators


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KV Kilovolts

KWH Kilo Watt Hour

LT Low Tension

MGVCL Madhay Gujarat Vij Company Ltd

MMB Metal Meter Box

MOA Memorandum of Agreement

MOEF Ministry of Environment and Forest

MOU Memorandum of Understanding

MW Mega Watt

NHPC National Hydro Power Corporation

NTPC National Thermal Power Corporation

PFC Power Finance Corporation

PGVCL Paschim Gujarat Vij Company Ltd

PLF Plant Load Factor

REC Rural Electrification Corporation Ltd

RMU Ring Main Unit

SBU Strategic Business Unit

SEB State Electricity Board

SERC State Electricity Regulatory Commission

SOE State Operated Enterprises

T&D Transmission & Distribution

TCS Tata Consultancy Service

UGVCL Uttar Gujarat Vij Company Ltd

WAN Wide Area Network

XLP Cross(X) Linked Polyethylene


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Gujarat Electricity BoardA Benchmark in the progress of State Electricity Board (SEB) Reforms.

Almost everybody had lost faith when it came to make a transformation of an entity, which was in deep trouble over last

seven years. In spite of all the travails, the entity was not anything to write off so easily. The investments were not justpeanuts to forget fast! The lives that were depended upon it couldnt just be ignored. The entity had been illuminating

each and every house and industrial establishment in the entire state of Gujarat except Ahmedabad and Surat. It had been

virtually giving a lifeline to nearly 40 million customers by of generating, transmitting and distributing electricity! Not a

small market to cater to under any scale.

The entity was none other than Gujarat Electricity Board (GEB), an organization consisting of nearly 50000 employees

and bearing investments of billions of Rupees. GEB ran into huge losses over almost seven years denting the image of

public sector in Gujarat. No rays of hope were seen until the financial year 2000-01, when an initiative by the Governmenof Gujarat led by visionary politicians, proficient administrators and diligent employees took everyone by surprise. A

major reformation were which included unheard of strategies and tactics to unbundled the board, renegotiation of power

purchase agreements (PPA), reduction of interest rates on loans, curbing of power theft and reduction of huge

transmission and distribution (T&D) losses without experimenting with the quality of fuel.

The change leaders rest their hands on various hopes and they took the last five years to build a transformation story

which could easily find its space among the brightest history of business. Gujarat Electricity Board was turned around

from making heavy losses to making healthy profits. This was done without raising power tariffs in spite of continualincrease in the cost of railway freight, coal and gas prices. Did the change agents play a trick or two out of the sorcerers

bag? No, they just did two very simple things, which ordinary companies somehow forget to do, rightly. They increased

revenues with a vengeance and cut costs with the passion of an entrepreneur.


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HISTORY OF GEB

Gujarat Electricity Board (GEB) was established along with the formation of Gujarat State in the year 1960 under Section

5 of the Electricity (Supply) Act 1948. Commencing with generation capacity of 315 MW and a consumer base of 1.40

million consumers, GEB today is the lifeline of over 7.3 million consumers across the State of Gujarat.

During 1970s and 80s, the major thrust was on the supply of electricity in the rural areas. It was largely due to GEBs

unwavering focus on rural electrification that Gujarat became the first state to achieve the landmark of 100%

Electrification of Villages. As per the 1991 Census, 17,940 out of 18,028 villages have been electrified which is

notified as close to 100%.

GEB continues to focus on its key objectives concerning generation, transmission and equitable distribution of power to

achieve an all-round economic growth of the State. Till date it has installed 1, 72,662 (as on 31-03-2003) transformer

centers and since four decades its per capita consumption has increased from 48 KWH (In 1960) to 932 KWH (as on 31-

03-2003).

For the development of rural areas throughout state, GEBs holistic Rural Electrification Programme covers electrification

of new villages, conversion of electrified villages from conventional method to Solar System and supply power to pump

sets, Petaparas (Hamlets) and Harijan Bastis by availing finance mainly from REC., New Delhi and State Government.

GEB stands committed to build Gujarat as the largest power hub of the nation. With equal emphasis on serving both- the

urban as well as the rural populace, it ensures a harmonious and a balanced growth of the economy by achieving its twin

goals of social up-liftment of people as well as economic regeneration in the State.


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OPERATIONS OF GEB

Generation

GEB and GSECL, a company owned by GEB, contributes to 57% of the total installed capacity of the state grid. The

remaining 43% comprises of Central Sector, Ahmedabad Electricity Company and Independent Power Producers.

Transmission

The state grid comprises of 400 KV, 220 KV, 132 KV and 66 KV transmission and sub-transmission lines.

The transmission department constructs, operates and maintains transmission lines and substations for transmission of

bulk power generated at various generating stations as well as the state's share of power received from the central

government's generating plants and IPP to various parts of the state through this network.

The network is managed by 10 transmission circle offices and 59 division offices (TR Division - 47 + Construction

Division - 12)

Distribution

The distribution of power to the end user is one of the most critical functions of GEB. Electricity is distributed to 8 million

consumers through 1,45,000 Circuit Kilometer (ckm) of HT lines, 2,06,000 ckm of LT lines and with the help of 2,30,000transformers.

The distribution department is responsible for supply of power to residential areas, commercial complexes, streetlights,

water works, agriculture and irrigation sector as well as various industries.

The consumer grievances cell functions under the distribution department. This cell resolves complaints of consumers and

provides guidance as and when required.


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CONSUMER PROFILE OF GEB

Consumer profile of Gujarat Electricity Board is much diversified. In the financial year, 2003-04 the company had sold

31001 MW of electricity to the consumers. As per figure1, 38 % of the total sales were part of agricultural customers

whereas high voltage industrial house had consumed 21 % as compared to 10.60 % consumed by industrial houses that

required low medium voltage. Total consumption of domestic residents was about 11 % while 4% of the total electricity

sold was being used by commercial segment. Major chunk of electricity around 12 % was supplied in bulk to the

licensees. And lastly, 1% was used by railway, 0.43% was used for public lighting and nearly 0. 02 % electricity was

supplied for inter state consumption. (Refer Table- 1 for total electricity sold out to different types of customers)


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Figure - Consumer Profile of Gujarat Electricity Board (In terms of total sales) in FY 2003-04

Consumer Profile of GEB in 2003-04

Supply in

Bulk to

other (supplyto

Domestic

Residents

licensees interstate) 11%

12% 0%Commercial

4%Public Water works2% Industrial Low

mediumVoltage

10.60%

Agriculture

Industrial High

Voltage38%21%

Traction RailwayPublic

Lighting1% 0.43%

(Adapted from Administrative Annual Report of Gujarat Electricity Board FY 2003-04)


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Table - Details of category wise sales of energy to different types of consumers in Gujarat

(Adapted from Administrative Annual Report of Gujarat Electricity Board FY 2003-04)

Sr. No. Types of Customers Units Sold (MW)

1 Domestic Residents 3523

2 Commercial 1114

3 Industrial (Low & Med.) Voltage 3289

4 Industrial High Voltage 6621

5 Public Lighting 136

6 Traction Railway 420

7 Agriculture 11605

8 Public Water works 607

9 Supply in Bulk to licensees 3661

10 other (supply to interstate) 25

Total 31001

NEED FOR REFORMATION IN GEB


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There are several reasons for urgent reforms mainly in the structure of organization, in overall working style and in the

efficiency of the organization namely Gujarat Electricity Board. These reasons are

1. Lack of efficiency in generation of electricity

2.

Higher transmission losses3. Ineffective performance in distribution of energy

4. Political interference in internal functioning of the board

5.

Power sector reforms drive in India

(1) Lack of efficiency in Generation activity of Gujarat Electricity Board

Generally, the generating capacity of any generation station of electricity is measured by its plant load factor and auxiliary

consumption. From the financial year, 1994-95 to FY 1998-99 the plant load factor remained 60 % to 65 % on an average.

(Figure - below) It showed that the generating efficiency had a stagnant growth rate and required an improvement for

better functioning.

Figure- Plant Load Factor status of GEB before reformation

Plant Load Factor of GEB

0.6765.20% 65.00%

65.72%0.66

63.74%0.65

Percentage

0.64

0.6360.50%

Plant Load Factor0.62

0.610.600.59

0.58

0.57

1995 1996 1997 1998 1999

Year


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As far as auxiliary consumption is concerned, the performance of Gujarat Electricity Board has comparatively remained

high. Basically, it was the power loss at the stage of generation. It almost remained at 9% to 10% over the period of five

years since 1995. (Figure - below) Such auxiliary consumption contributed to the heavy generation losses and low rate of

return on investment as a natural corollary.

FigureAuxiliary Consumption of GEB generating Stations

Auxiliary Consumption of GEB Generating Stations

10.28%

10.30% 10.02%10.20% 9.90%

9.96%

10.10%10.00%

9.71%

Percentage

9.90%

9.80%

9.70%

9.60%9.50%

9.40%1995 1996 1997 1998 1999

Year

(2) Higher Transmission Losses


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Figure Transmission Losses of GEB

Transmission Losses of GEB

ElectricityTransmitted

8.00% 7.14% 6.54%7.10%

5.95%

Percentageof

7.00%6.00%

5.00%4.00%3.00%2.00%1.00%0.00%

1995 1996 1997 1999

Year

1995 1996 1997 1999

Higher transmission loss was the major motivational trigger for the reform in power sector in Gujarat in general and

Gujarat Electricity Board in particular. As per Figure - above, it is evident that from the FY 1995 onwards to 1999, the

loss remained around 6% to 7% - of the total percentage of electricity transmitted. The main reasons for such losses were

huge amount of power theft, obsolete equipments used for transmission of electricity and lack of effective supervision

especially on High Tension (HT) consumers.


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According to the 7th schedule of the constitution of India, which defines the share of responsibility between the Union

and the State governments of the Indian federal system, the power sector lies in its concurrent list. This means that the

Union sets the policies and each State is in charge of its implementation and of operationalizing the


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system in its respective territory. This sector used to fall under the rules framed by Electricity Act, 1948, and its

successive amendments. (and since 2003, under the Electricity Act, 2003). The Electricity act, 1948 used to specify that at

the state level, the State Electricity Bards are responsible for the development and operation of generation, transmission

and distribution in the most economical way. The SEBs have got an autonomous status. Each SEB reports to the Power

secretary of its respective state government, who is the highest civil servant under the State Minister of Power. State

Electricity Boards are attached to Planning Commission since the latter determines the desirable investments and

coordinate its functions with the other Ministry such as Ministry of Finance, Coal, Railway, Water resources and

Agriculture. Secondly, Central Electricity Authority (CEA) has been providing technical advisory services to each SEBs.

Where organizational structure is found overlapping, it is quite obvious that vested interests will play a vital role when

there is going to be a constant interaction among bureaucratics and political heads at different layers of Central

Government, several State Governments, Technical bodies, and Advisory bodies. Here, this vested interest will endeavor

to promote their interest by making connivance with the politicians and bureaucrats. For example, according to the report

of the World Bank (1997), the root cause of the inefficiency of the power sector in Indianow largely recognized by the

policymakersis the pervasive politicization of most decisions affecting Electricity Boards operations and expansion, and

resulting the lack of commercial outlook in its functioning. 5The state, generally, has regarded its Electricity Board as an

extension of the government and has exerted the influence over its tariffs, operational, personnel, procurement and

investment decisions to further political objectives. As a consequence, Electricity Board has been compelled to charge low

tariffs to agricultural and residential consumers, and to undertake or continue unremunerative activities on behalf of the

State Government without expecting the reward. Electricity Board has not been able to enforce survival remedies to

collect bills, and to take bold measures in order to eliminate the large system non-technical losses.

Gujarat Electricity Board, like other SEBs obstructing for many years from behaving as a commercial entity, had thus

been progressively transformed into an extension of the State Government and finally had been unable to meet the

requirements of electricity of the State.

(5) Power sector reform drive in India

Power sector reformation in India became necessary because of the following factors:


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9 Poor financial condition of State Electricity Boards.

9

Lack of commercialization of power utilities.

9 Increase in burden of subsidy for States.

9 Deterioration in quality of service and growth in power shortage.

These motivational reforms have been identified by extensive opinions of experts as well as of key players in the industry.

Reformation can be driven by the desire to improve the economic efficiency of the enterprise. This is the standard reason

cited in most literature on the economics of electric power markets. Taking into account the hurdles to be cleared in

restructuring the power system-- and interlocking the functions of state-owned enterprises-it is expected that efficiency

alone is not the extreme factor, but sometimes, the high costs of electricity production and the political collusion are

strong factors to push up restructuring activities. Many firms are largest users of electricity like steel plants, mining

operations, and heavy manufacturing. For them, the solution for high prices is to negotiate with the state system to lower

the prices of their inputs through central command rather than to break up the entire system. Lower electricity prices

would make it hard for electric power utilities to stay afloat in terms of financial viability, which in turn would create a

need for additional transfers of monetary resources and other state based financing.

The reform is driven by crisis in supply. In state centered systems, where prices are typically regulated, problems of poor

supply are often reflected in blackouts and other quality failures rather than high prices. Where power supply quantities

are inadequate, a useful barometer of political power is distinguished by considering as to who bears the brunt of

blackouts and who achieves benefits. However a breakdown in the state financing system would trigger crises in supply

and thus motivate reforms.

Restructuring can also be pursued as a part of a broad based streamlining the activities of Indian economy. Such effortsusually include attempts by the state to exit a wide array of industries such as ports, airlines, communications and natural

resources. Thus it is always expected that electricity would be among the last industries to be restructured as part of a

comprehensive reform strategy simply because of introduction market forces that lead electricity among the list of most

complicated tasks. The physics of electricity make it difficult to proceed with reformation on a piecemeal basis, and often

the sources of greatest dysfunction in the power system are parts like transmission and distribution that are truly natural

monopolies. Rapid technological changes, especially in wireless communications and the ability to isolate highly

competitive parts of the market from the elements that retain characteristics of monopoly tend to create a huge opening for

competition.

Reforms can also be launched by political entrepreneurs in an attempt to re-allocate assets. In state owned system, talented

and politically connected entrepreneurs will usually work within the state system to redirect rents. But for


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political forces that are outside the system restructuring can be viewed as the strong strategy for shifting the ownership of

firms to different states or private interest groups. This can be a key driver for reform only in cases where there is high

degree of asymmetry between control over electric power assets and those who have the power to implement a full scale

reforms.

Reformation efforts may be launched because it is considered a trend or a necessity. In fact, policy makers at the State

Government (Government of Gujarat) level always face enormous pressures and challenges to transform GEB since the

Electricity Act, 2003 has been formulated. Before the enactment of Electricity Act, 2003, Government of India had

pursued power sector reforms in form of setting up regulatory commissions and designing distribution reform

programmes under its flagship programme Accelerated Power Development & Reforms Programme (APRDP) which has

been discussed in later part of the case.

THE ELECTRICITY ACT 2003

THE recently enacted Electricity Act, 2003 heralds the third phase as the `trial-and-error' process of power reforms, which

has been under way since the early 1990s. The first phase was dominated by the Independent Power Producer (IPP)

paradigm, but was grounded to a halt within few years of its launch owing to many contradictions. The second phase was

marked by the Orissa model of distribution reforms with its thrust on privatization. The degraded failure of the Orissa

model ensured that this phase remained a non-starter in other States although Delhi managed to push through a slightly

different model with liberal subsidy support from the government. The new Electricity Law consolidates all existing laws

allowing trading in electricity and seeks to introduce markets for electric supply in the hope that at least this will revive

the country's beleaguered electricity sector.

The new law provides òpen access' to transmission and distribution networks so that consumers can source their supply

from any supplier, be it the incumbent distribution licensee the State Electricity Board, IPP or a licensee of another area.

While theoretically òpen access' is available to any consumer, in practice, it will be limited to bulk consumers such as to

industries and commercial establishments. It is infeasible to introduce competition in low-tension supply not only because

there are millions of consumers to be serviced, but also because this segment is considered unremunerative. Tariffs

charged on low-tension consumers both in rural and urban areas are currently cross-subsidized by the high-tension andcommercial consumer segments. Once the latter decide to source their power directly from IPPs, thanks to òpen access',

the incumbent utility - the SEB or its successor entity - would be left with the marginal consumer segments whose present

tariffs would be insufficient to cover the costs of supply.


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The loss of the cream consumers would seriously jeopardize the ability of the SEB to go on servicing the unremunerativeconsumer segments.

To reconsider the fact, Section 68of the Electricity Act, 2003 provides: "If the State government requires the grant of any

subsidy to any consumer or class of consumers in the tariff determined by the State Commissions, the State government

shall... pay in advance... the amount to compensate the person affected by the grant of subsidy." While that might seem a

reasonable proposition, in reality State governments have been unable to pay out the subsidies. The Andhra Pradesh

government, which during the past three years had directed the regulator to peg the tariffs of rural and domestic

consumers below the cost of supply, had agreed to pay out subsidies running into thousands of Crores. But owing to its

straightened financial condition, it ended up issuing bonds to the distribution companies and making book adjustments in

lieu of cash. The Andhra Pradesh Electricity Regulatory Commission has ordered that if the State government fails to pay

up the subsidy, the distribution companies are free to charge tariffs that reflect the cost of supply.

In case of a situation where less than half of the electricity that is supplied is actually paid for, tackling commercial and

technical losses would automatically raise the revenues of the utilities and without any increment in tariffs. However,

Section 135 of the Act prescribes a penalty of three times the financial gains accruing from theft for the first conviction

and only imprisonment for subsequent convictions, that too for theft of more than 10 kilowatt hours. The emphasis on

cost-reflective tariffs and elimination of subsidies in the absence of stringent anti-theft laws is a sure recipe for pushing

the marginal and poor consumer segments out of the grid, limiting electricity supply to those who can afford it. The

significant achievement of the new law is that it treats electricity as a commodity and entrust its supply to the markets.

Under Section 7, all generations, including captive generation, has been de-licensed. In all probability, mini generation

plants - perhaps diesel gensets - will proliferate in urban residential colonies, as Section 13 authorizes the SERCs to

exempt users' associations, panchayat institutions, cooperative societies, non-governmental organizations and franchiseesfrom procuring license for power supply. Industries too would opt for captive generating plants.

One important provision that did not figure in the original Bill but found its way into the Act is a proviso in Section 14,

which stipulates that "the Appropriate Commission may grant a license to two or more persons for distribution of

electricity through their own distribution system within the same area", if such licensee complies with the requirements

like capital adequacy, creditworthiness etc.. This is nothing but an allowance for duplication of networks, a waste of

national resources that even the most prosperous economies refrain from advocating.


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Documentation of Electricity Bill, 2001 and the subsequent enactment of Electricity Act, 2003 reflect a measure of

motivation on the part of the government to explore the horizons and to continue the reform agenda in power sector of

Indian economy.

CERC

It is pertinent to discuss here, the regulatory set up governing electricity scenario in India. Central Electricity Regulatory

Commission is the regulatory authority of electricity generation, transmission and distribution activities all over India. It

has its state wise offices such as Gujarat Electricity Regulatory Commission (GERC). The Commission intends to

promote competition, efficiency and economy in bulk power markets to improve the quality of supply to promote

investments and to advise government on the removal of institutional barriers to bridge the demand supply gap and thus

foster the interests of consumers. In pursuit of these objectives the Commission aims to

9

Improve the operations and management of the regional transmission systems through Indian Electricity GridCode (IEGC), Availability Based Tariff (ABT), etc.

9

Formulate an efficient tariff setting mechanism ensuring speedy and time bound disposal of tariff petitions,

promoting competition, economy and efficiency in the pricing of bulk power and transmission services with least

cost investments.

9 Facilitate open access in inter-state transmission

9 Facilitate inter-state trading

9 Promote development of power market

9

Improve access to information for all stakeholders.9 Facilitate technological and institutional changes required for the development of competitive markets in bulk

power and transmission services.

9 Advise on the removal of barriers for entry and exit of capital and management, within the limits of

environmental, safety and security concerns and the existing legislative requirements, as the first step to the

creation of competitive markets.

APDR


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Power is a critical infrastructure for economic growth. The economic acceleration would greatly depend upon a

commercially viable power sector that is able to attract fresh investments. However, the financial health of State

Electricity Boards (SEBs) has become a matter of grave concern considering that their losses have reached an alarming

level of Rs.26,000 Crores during 2000-01 which was equivalent to about 1.5% of Indias GDP. Accelerated Power

Development Programme (APDP) had been undertaken from the year 2001-02 as a last means of restoring the commercial

viability of the Distribution Sector.

As incentive financing is proposed to be integrated with the existing investment programme to achieve commercial

viability of SEBs / Utilities and link it to the reform process, the original APDP was rechristened to Accelerated Power

Development & Reforms Programme (APDRP) during 2002-03.

The objectives of APDRP are:

Improving financial viability of State Power Utilities

Reducing AT & C losses to around 10% Improving customer satisfaction

Increasing reliability &quality of power supply

In APDRP, initiatives have been undertaken for bringing about commercial viability of SEB/Utility by various levels of

interventions such as commercial intervention, technical intervention and administrative intervention.

DISTRIBUTION REFORMS BY APDRP

The Distribution Reforrm was identified as the key area to bring about efficiency and improvement in financial health of

the power sector. Ministry of Power took various initiatives in the recent past for bringing improvement in the distribution

sector. All states have signed the Memorandum of Understandings (MoU) with the Ministry to take various steps to

undertake distribution reforms in a time bound manner. Subsequently, 24 states have constituted SERCs and 20 have

issued tariff orders in the direction of rationalizing the tariffs. States are now better committed towards subsidy payment

to the utilities.

All states have securitized their outstanding dues towards CPSUs. 13 states have unbundled their SEBs. 9 States are

expected to un-bundle their SEBs by June '06. Electricity Distribution has been privatized in Orissa and Delhi.


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Even though SEBs have expertise in different fields, the strengthening of the sub-transmission & distribution network on

a scientific basis using computer aided tools requires an integrated knowledge. Most SEBs, during the regional meetings

held in April and then later in June, 2001 expressed their inability to take up such work with their own manpower. It was

considered necessary to promote capacity building exercises in SEBs/State Power Utilities to enable SEB personnel to

prepare detailed project reports for each district and implement the project using APDRP funds at a later stage.

Capacity building exercise is mainly to cover training the manpower, energy audit & accounting studies, making the SEB

officials collect relevant data from each 11 KV feeder in the identified circle, analysis of the data using computer tools to

prepare feeder wise computer aided least cost project report, supervision of implementation.

Several training programmes were organized by the training institutions such as Power Management Institute (NTPC),

National Power Training Institute, PGCIL etc., and several working level officers from various SEBs benefited from these

programmes. It is further planned to bond their efforts by imparting quality training to bring about changes in business

perspectives which is crucial in the success of our power reform programme.

However, all such measures are cosmetic in nature. Distribution reforms require a structural change in the existing set up

of the SEBs. Government of Gujarat took the call and initiate power reforms with great vigor. Today, it is the 2ndno. state

in power reforms next to Andhra Pradesh

GUJARAT ELECTRICITY BOARD TRANSFORMATION

A transformation story of GEB prominently appeared in newspaper on 13thJune, 2006 seems to have gone unnoticed. The

news headlined that Gujarat Government has successfully turned around the Gujarat Electricity Board (GEB) which was

about to go sick five years ago, enabling the latter to earn a net profit of nearly Rs 200 crore and that too, without raising

power tariffs. Specifically speaking, the Board has come across one of the most significant transformation in recent times

with the profit of Rs 200 crore in fiscal year 2005-06 replacing the whopping cumulative loss of Rs 2,542 crore in fiscal

2000-01.

Although the power sector reforms were directed centrally i.e. the guidelines and incentives of power sector reforms were

issued by Central Government of India, Government of Gujarat (GoG) was able to increase the revenue and reduce the

expenditure with its execution skills, financial prudence and economical measures, and most importantly


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was able to take some really tough and politically-sensitive steps, such as completely ignoring the pleas of politicians etc.

Hon. Minister of State, Mr. Saurabh Patel wisely credited this transformation as the "political will" of the Gujarat

administration. The Board officials were directed to deal sternly with cases of power theft and non-payment of bills either

by individuals or by companies. He accorded the major credit to the execution skills of administrators especially in areas

of action against violators of GEB norms. For example, State Government set up five regional special police stations to

deal with such cases and punish the violators.

Interestingly, they appointed 500 retired army personnels to keep the power offenders in check. Thousands of theft cases

were detected and then disconnected; they were reconnected only after the violators, including companies, paid their

arrears though certain numbers of violators were convicted by the courts. GEB, thereby, appointed managers who were

accountable to settle the case. As a result, nearly 20 lakh connections were verified and rechecked annually.

The contributions of GEB officials were truly noteworthy in this transformation. To highlight, GEB officials,

accompanied by police, wandered from villages to towns during night hours to check power theft. While implementing

the same, they also braved the irate people who attacked them at several places and protested in all possible manners. For

instance, once, an official was kidnapped and kept in bondage until rescued by the police after several hours. Despite

these, the Board went ahead with strict measures, in accordance with the provisions of the New Electricity Act that

empowered the authorities to lodge criminal cases against power thieves.


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STRATEGIES FOR REFORMATIONS

The key strategies undertaken for improving the performance of erstwhile GEB are:

1. Optimization of power purchase cost

2.

Overall improvement in operational efficiency

a. Structural reforms

Unbundling of GEB

Corporatisation of GEB

b. Reforms to reduce AT & C Losses

Curbing transmission and distribution losses

I. Bifurcation of feeders

II. Distribution transformers review

III. Increase in number of substations

IV. Curbing Power theft

V. Sealing of connections

VI. Provision of Metal Meter Boxes

VII. Grievance redressal through effective appellate procedure

VIII. Optimum use of Information Technology

i. Installation of Geographical Information System

ii. Introduction of Enterprise Resource Planning

3.

Significant improvement in Cash collections.

4. Human Resource Management

a. Augmentation in Manpower Efficiency

b. Enhancement and Human assets development

5. Focus on rural electrification by unique scheme Jyoti Gram

6. Savings in interest cost by debt restructuringFinancial Restructuring


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1. Optimization of Power Purchase Cost

The power purchase cost has been reduced by renegotiating Power Purchase Agreements with Independent PowerProducers (IPP).

The most remarkable fact is that this transformation marked its pave without raising power tariffs despite of a significant

increase in the cost of railway freight, coal and gas prices. GEB followed a simple principle: Increase revenues and reduce

expenditure. Firstly, GEB decided to renegotiate the power purchase agreements (PPAs) with independent power

producers (IPPs). In 2003-04 , it began renegotiating with the four IPPs - Essar Power, Gujarat Paguthane, GIPCL and

GSEG, the latter two being state-owned companies. The direct result to this was a Rs 4.95 crore saving in payments to

IPPs in 2004-05. Continuing the negotiations, it managed to get a further reduction of Rs 64 crore in the first half of 2005-

06, leading to a total annual saving of Rs 559. As GEB's dues to the IPPs had piled up to a staggering Rs 1,200-1 ,300

crore in 2003-04 , it asked these companies to work out a compromising solution failing to which they would have to end

the operations as GEB would become sick. Today, after the renegotiating of PPAs, all dues of GEB have been paid-up

with no outstandings.

Secondly, GEB created a reduction in general purchase cost through creation of a Centralized Purchase Cell, helping them

to initialize timely and cost-effective procurements of materials and proper inventory planning.


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Thirdly, GEB strived hard to save its fuel costs. It commenced to use washed coal having ash content below 34 %. Use of

washed coal was necessary to fulfill the Ministry of Environment and Forest (MOEF) Notification relating to air

pollution, increased plant performance of thermal power stations as well as overcoming the problems of water scarcity

and ash disposal. .

GEB began using washed coal on an increasing scale at their thermal power stations, especially at Ukai Power station

and Wanakbori Power Station since April 2001 and November 2003 respectively. At Gandhinagar Power station, use ofwashed coal started from April 2004. This step led to huge savings of Rs. 137.93 Crore over the period of four years.

At present, continuous efforts are being made by GEB to get higher percentage of better quality of coal. In fact, it has

devised the coal matrix to comply with the MOFE notification. In addition, it had made it mandatory to use mixed coal

collected from various sources having ash content of less than 34 %.

2. Increase in operational efficiency

In order to enhance operational efficiency of GEB, the government of Gujarat has used several tactics such as structural

reforms, organizational restructuring, steps to curb power theft, reduce technical losses as well as better customer service

by using Information Technology (IT) tools.

(A) STRUCTURAL REFORMS

Need for Organizational Restructuring


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Reformation in State Electricity Board (SEB) has been a debatable issue in India since the overall economic reform

process acquired momentum. It is noticed that a consistent reform scheme has been promoted by Government of India,

with the support of development agencies, like World Bank standing as a pillar. This scheme is called structural reform

since it out bounds the earlier cosmetics and limited attempts.

To start with, SEBs especially Gujarat Electricity Board strongly necessitates the want for speedy reforms in

organizational structure as well as procedural aspects of the organization due to higher technical and commercial losses,

rising power theft, growing burden of subsidies, massive political interference, lack of competitiveness, and absence of

operational efficiency. In fact, these reforms have crystallized in Electricity Act, 2003 which extends the logic of

structural reforms and puts them in the competitive oriented framework. Interestingly, for the outside funding agencies,

structural reforms are transition phases to usher in privatization.

Secondly, these structural reforms support de-integration in the overall organizational makeup. As informed in the case,

there are primarily three activities in power sectorgeneration, transmission and distribution of electricity. It is agreed

that transmission is just a natural monopoly. However, generation is competitive and distribution is only a local natural

monopoly. Thus both generation and distribution need not remain as horizontally integrated. They have to be separated

from transmission to avoid distortion in competition. And ultimately electricity boards functions must be vertically de-

integrated. In addition, such de-integration of functions can provide transparency in the organization.

Finally, such structural reforms are aiming at making transparent procedures, availing more internal discretion and avoid

direct executive instructions as well as political interference so that losses can be minimized, expenditure could be curbed

and efficiency can be augmented.

The Gujarat Electricity Board (GEB) is one of the most advanced, progressive and technically equipped electricity boards

in India. GEBs principal objective is to provide better services to the people of Gujarat with an aim to supply un-

interrupted power to the large number of consumers.

In order to become a profit making, efficient and effective organization with the best customer services, GEB, first of all,

carried out organizational restructuring process.


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FigureModel of Unbundling

Model of Unbundling of GEB

Generation

Competition

Gen 1Gen 2 Gen 3 Gen 4

Transmission

Network

Monopoly

Regulation

Distribution

Consumers Sup 1 Sup 2 Sup 3 Sup 4

Supply Competition

Basically, unbundling means restructuring or reorganization of various utilities into different autonomous component

operations. It is in fact, a practice of creating several departments into independent strategic business units (SBUs). For

example, earlier a state electricity board (SEB) in India was performing activities relating to power supply except

generation. Now, with the introduction of Electricity Act, 2003, the competition is encouraged by private players in form

of Independent Power Producers (IPP) for generation and distribution of electricity. However, the monopoly in network of

transmission has remained intact with State. (SEE MODEL of Unbundling) In order to deal with the competition

propounded by Electricity Act, 2003 to achieve efficiency in operations, state government of Gujarat has restructured its

organization set up by dismantling of the SEBs and creation of `independent organizations' with `unbundled functions.

(See below figure) These organizations are to be turned into `privately owned body corporate' which would help in the

growth of the power sector since "the quest for higher profit will motivate their activities, and they will have a greater

commercial orientation than most Government-owned organizations".


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FigureStructural and Functional Comparison of Erstwhile and Changed GEB 1

Activities Erstwhile Existing

Generation

GSECL

GSECL-N

GUVN

L

Transmission

GSEC

LGETC

OL

DispatchG

Bulk Purchase & SaleE

GETC

O

Distr.ibutionWires Wires

B

UGVC

L

Retail Supply -Commercial,PGVC

L

Retail Supply MGVCLDGVC

L

The transformational structure

Earlier, all the activities namely transmission of power, dispatch of electricity, bulk purchase, distribution of electricity to

the end users in rural and urban areas of Gujarat were being handled by the Gujarat Electricity Board. Now, Central

Government has paved the way for comprehensive restructuring and reorganizing of the electricity boards as per

Electricity Act, 2003. Besides, Government of Gujarat has formulated the Gujarat Electricity Industry (Reorganization &

Regulation) Act, 2003 which results into split of Gujarat Electricity Board into four regional power generation companies,

four regional distribution companies, one transmission company and one parent company. (See above Figure )

As a result, GEB has acquired corporate status and renamed as Gujarat Urja Vikas Nigam Ltd.(GUVNL). It continues to

focus on its key objectives of generation, transmission and equitable distribution of power to achieve an all-round

economic growth of the State.

For few more details, Gujarat State Electricity Corporation Limited (GSECL) was incorporated under the Companies Act


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1956 in 1993 with the motto to initiate a process of restructuring of Power Sector and to mobilize resources from the

market for adding to the generating capacity of State and improving the quality and cost of existing generation. GSECL

envisages a wide spectrum of activities to improve the electrical infrastructure of

Gujarat. GSECL has initiated its activities in the field of generation of power. Government of Gujarat has also given to the

GSECL the status of Independent Power Producer (IPP) with approval to undertake new power projects. The Equity Share

Capital to the tune of Rs. 4440 Million is entirely held by GUVNL. It is a unique and innovative concept visualized byGujarat Electricity Board with a view to corporatise the power sector and to enhance the generating capacity with funds

from financial Institutions, Banks etc. The Company made Profit of Rs. 1080 Million for the year ended in March, 2001

Also, with the initiation of power sector reforms in the State of Gujarat, The Gujarat Energy Transmission Corporation

Ltd (GETCO), has been created to look after the transmissive functions such as construction, operations and maintenances

of transmission lines and substations. In its endeavor to improve the efficiency in its operations, Government of Gujarat

has decided to bring in expertise through public participation in its transmission business, in keeping with the trend of

outsourcing the operation & maintenance of sub-stations. Currently, the network of 10 transmission circle offices and 59division offices is being managed by GETCO.

Finally, Government of Gujarat has incorporated four distribution companies for four different geographical regions of the

State. For regions of north Gujarat, it has formed Uttar Gujarat Vij Nigam Ltd (UGVNL). Likewise, it has formed

Madhya Gujarat Vij Nigam Ltd.(MGVNL), Dakshin Gujarat Vij Nigam Ltd(DGVNL) and Paschim Gujarat Vij Nigam

Ltd. (PGVNL) for conducting the functional distribution of electricity in Central Gujarat, South Gujarat, and West Gujarat

respectively.

Their objective is to undertake the electricity sub-transmission, distribution and retail supply in the respective regions of

Gujarat or outside the State. For this purpose, they are authorized to plan, acquire, establish, run, manage, maintain, and

modernize a power system network in all its aspects. They are also empowered to carry on the business of purchasing,

selling, importing, exporting, and trading of electrical energy. It includes formulation of tariff, billing and collection

thereof. In addition, they can investigate, collect information, review operations, plan, research, design and prepare project

reports, diagnose operational difficulties and weaknesses and advise on the remedial measures to improve and modernize

existing sub-transmission and supply lines and sub-stations.

Moreover, a state (regional) load dispatch center has been created at Jambuva (Vadodara) as per the requirement of

Electricity Act, 2003. The role of state load dispatch centre is largely to ensure quality power supply at rated voltage and

frequency. It has to deal with economical scheduling and dispatching of power produced by - Gujarat Electricity Board,

Central Sector Power Stations and independent power projects.


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Apart from these, a state load dispatch center has to consider the following functions:


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a. Ensuring system security and stability.

b.

Monitoring and controlling exchange of inter-state and central sector energy.

c. Monitoring of loading values of lines / transformers etc.

d. Immediate restoration of power system after disturbance.

e.

Forecast of generation availability and demand from various category of consumers for different seasons.f. Planning and scheduling of generating unit outages.

g.

Periodical review of load control measures

In nutshell, as a part of reform process, it has been envisaged to disaggregate GEB, the Promoting Body into separate

entities with functional responsibilities for generation, transmission and distribution respectively with complete

autonomous for operations.

Process of Corporatisation of GEB

Corporatisation is the part of the structural reform programme of GEB. In actual terms, corporatisation refers to the

change of status, from Board to entity under Companies Act, 1956, that is, judicially speaking, to a status of company

form of organization. Once an entity becomes a company from the Board, the changed status will become the basis of

each and every reform stride.

As part of the corporatisation process, the following steps have been taken; 15

Professionals on the Boards of the Companies i.e. at generation level as well as t distribution level are hired for

better management of such companies. There was a headhunt for the post of Managing Director in all companies.

They have been recruited purely on their merits.

Key Performance Indicators (KPIs) 16have been introduced. These indicators are charged as the benchmarks of

performance. Actual performance is being measured against the standards set by KPI. Corrective actions are

mandatory for the deviations found between actual and standard KPIs.

Mission and Vision statement of each Company have been formulated and subsequently communicated to the

employees of all companies through introducing wider visibility in form of banners and posters on the office walls

of the companies and their working stations.


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Financial autonomy has been awarded to each Company.

As discussed earlier, a regulatory authority named Gujarat Electricity Regulatory Commission has been set up in 1998

under Regulatory Commission Act, 1998. The process of corporatisation has been cemented with the help of such an

appropriate regulatory set up.

The main functions of regulatory commission of the state are the tariff settings, determining profitable operating

conditions for the operators and protecting the larger consumer interests in electricity market. It issues tariffs that ensure

financial viability for power companies, provided that they achieve minimal progress requirements on their efficiency. In

reality, GERC has been assigned the task of balancing social subsidies, profitable tariffs and quality improvements.

Independent functioning of GERC over the span of 8 years of its operations has helped Gujarat Electricity Board to

improve its operations, reduce its subsidies and serve their customers in a better way. It has issued two tariff orders, GRIDCode, Supply Code, Distribution Code, and Standard of performance of distribution licensees. It has also set up one office

of an Ombudsman in order to immediately dispose off consumers grievances. It regularly cond ucts public hearing

through participatory process. The last and the most important, all costs are scrutinized by GERC before approval. This

results into cost savings to the larger extent.


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(B) REFORMS TO REDUCE AT & C LOSSES (AGGREGATE TECHNICAL AND COMMERCIAL

LOSSES)

Reasons for Energy losses

Initially, energy losses occurred in the process of supplying electricity to consumers due to technical and commercial

losses. The Technical losses refer to the loss arised due to waste of energy produced. These losses have been cropped up

in GEB mainly due to energy dissipated in the conductors and the equipments used for transmission, transformation, sub-

transmission and distribution of power. Other reasons for greater technical losses are overloading of existing lines and

substation equipments which in turn increases the distribution burn out rate and subsequent loss of energy. Secondly,

absence of upgradation of old lines and equipments caused heavy damage in terms of loss in energy and obsolete

equipments rarely helped to obtain better energy transmission and distribution. Poor repair and maintenance of

equipments and old lines, overloading of existing lines, low number of substations, non-installation of sufficientcapacitors and finally, low HT:LT ratio are the major reasons sited for the heavy technical losses. Low HT: LT ratio

signifies that as compared to high tension lines, the low tension lines are quite few. The HT: LT ratio, ideally should be

1:1. However, due to the extensive electrification of the domestic sector in State and the consequent expansion of LT

lines, the ratio has now become around 1:6.25. 17This ratio can be improved only by drawing HT lines on a massive scale

which would entail big capital investments, besides a strong political will to deal with public resistance against taking the

overhead lines over private lands.

As far as the commercial losses are concerned, they are caused by power theft, defective meters, errors in meter reading,

estimating unmetered supply of energy, low accountability of employees, less efficiency of cash collection and lack of

accounting and auditing of energy. The major possibilities of increase in power theft are considered to be unauthorized

energy consumption by agricultural, industrial and retail consumers.

In the following graph, one can easily notify the reasons for the occurrence of technical and commercial losses as well as

initiatives taken by the Gujarat Electricity Board to lessen such losses.


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(Adapted from Annual Report, 2003-04 Ministry of Power, Government of India)


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Measures taken by GEB to prevent technical losses

Reduction in technical losses has now become the need of an hour for GEB to control its overall losses and modify the

whole entity in its totality. Better technical innovations are imperatively required to increase overall efficiency of GEB

operations, apart from merely structural reforms that would help in giving only hassle-free environment and autonomy

with accountability to people at the helm of affairs for better management. Such technical inventions highlighted areconversion of the existing distribution network into a high voltage distribution system (HVDS) covering reduction of LT

lines; taking high voltage line up to the load centre, supplying power through smaller capacity and energy efficient

distribution transformers, reconducting over loaded lines, correcting power factor, mapping by way of Geographic

Information System (GIS), obtaining pole wise consumer information etc.

Bifurcation of feeders

Feeder is a core component in the transmission line for supply of electricity. Essentially, it transmits power from

generating station to a substation or a network. Then, such power is distributed to consumers from transformers. Most of

the times, such feeders cause overloading which in turn lead to higher distribution transformer burnout rate. Besides,

undersize conductors installed in each feeder simply add to the miseries. All these factors result into heavy transmission

losses to GUVNL. Thus, a concerted effort is required to bifurcate the feeders leading to installation of more transformers

and replacement or rectification of conductors in order to reduce overloading as well as lower distribution burnout rate.


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GEB has initiated rigorous efforts of bifurcating feeders to reduce this overloading. It started with bifurcating 151 feeders

in FY 2001-02 where it reached to 236 in FY 2003-04 and 360 in FY 2004-05. GEB had to spent almost nearly Rs. 8 to 10

Lacs and erect at least 4 kms to 5 kms new lines (LT) in bifurcating one feeder. In addition, it required a great amount of

labors from the lower strata of the organization

Generally, a distribution transformer is used to supply relatively small amounts of power to residences. It is used at the

end of the electrical utilitys delivery system, which is often mounted on a pole. Distribution transformers (DTs) review,

here, refers to the efforts of GEB to bring them at the load centers where better monitoring was took place to augment

transformation capacity which benefited in (a) immediate financial gain (b) reduction in technical losses and (c) reduction

of system break downs.

Increase in No. of Substations

Substation is a place that comprises of transformers distributing electricity with low voltage that can be easily accessed by

retail consumers. In a substation, one can find a collection of equipments for the purpose of raising, lowering and

regulating the voltage of electricity. In order to have transmission efficiency, Electricity Regulating Authority needs to

increase in number of substations so that proper regulations can be executed. GEB has established, over a period of last 10

years, and increase in total number of substations from 563 in 1995-96 to 804 in 2004-05 where in 400 Kv substations are

increased from 5 to 9 in 2004-05. Besides, the number of substations consisting of 220 Kv, 132 Kv, and 66 Kv are raised

from 40 to 65, 43 to 49 and 470 to 680 respectively from 1994-95 to 2004-05. Currently, ABB is undertaking the system

studies for suitable location of substation, efficiency in the network and equipments to be used in the network.


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Replacement of Old Equipments

Last but not the least important measure is to replace old equipments with fresh ones and to undertake certain noteworthy

system improvement measures. In fact, GEB has installed ring main units and Arial bunch conductors across several

places to ensure continuous power supply and to curb power theft in a more stringent way.

To supply continuous power has been a major problem in Gujarat especially in rural areas. To bring a sensible solution,

GEB has motivated its innovative technical executives to come up with appropriate suggestions to tide over the menace.

For this, they have recommended to introduce the state-of-the-art Ring Main Units to ensure continuous supply of power.

In depth, Ring Main Unit (RMU) is switchgear used solely to open and close electric circuits, specifically the one utilized

to control a high-current application e.g. a power and transforming station or an electric motor. In addition, RMU provides

greater flexibility in distribution thorough which supply can be restored from any adjacent section and faulty section can

be easily isolated, leaving the healthy sections continue to operate. This would allow maintenance to be carried out in

faulty section without disturbing other healthy sections. Therefore, considering the fact, GEB has initiated the process of

ring main units in its several installations.

Arial bunch conductors are a collection of XLP insulated form of bear conductors made up of aluminum as a basic

conduction element. Earlier, uninsulated form of bear conductors were used, which were in reality, easily prone to

tampering. Later on, once it got converted into XLP insulated form of bear conductor and laid on air through poles in

bunch in form of Arial Bunch Conductors, it, then, became highly impossible for the offenders to pilferage electricity by

fixing direct connection.

Prevention of Power Theft

Initially, Gujarat was facing severe problem of enormous power theft from rural as well as urban areas. Power theft was,

then, incurred either by illegally connecting private lines to the power supply wires, or by using electrical devices

(commonly referred as hook or ankdiin Gujarati) to divert the electrical current. This, usually, resulted in lower meter

reading, allowed unauthorized consumption, objected interruption of the meter functioning or lines that were put up in

upstream of unsealed meters. Such methods did not require an involvement of any GEB official, but of course, the

availability of such help could worsen the situation. In certain cases, such power theft, both by high tension (HT)

consumers as well as low tension (LT) consumers led to bribing the responsible authority as the amount of power billed

was lowered by them (GEB agents) from the energy actually metered.


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In its drive to reforms, GEB has set up one vigilance department headed by IPS (Indian Police Service) officer in the rank

of Addl. Director General of Police on deputation by the Government of Gujarat. He is designated as Director of Security

& Chief Vigilance Officer(DSCVO)

To keep constant vigil and to detect pilferage of power, GEB has formulated 74IC Squads working under Addl. Chief

Engineer Vigilance under the control of DSCVO. In vigilance department, they have formed two types of squads i.e.

(1) HT Squadto check the HT installation

(2) LT Squadto check the LT industrial, Commercial, Residential installations.

Interestingly, in order to supervise LT industrial connections, there are 63 LT squads, out of which 19 Squads are headed

by Dy. Engineer and 44 Squads are headed by Jr. Engineer, stationed at different circles. Over and above these, the rest 11

HT squads, headed by Dy. Engineer, are stationed at Surat, Bharuch, Baroda, Bhavanagar, Mehsana, Sabarmati, Rajkot

and at Baroda Head Office.

Glimpse of Power Theft in Gujarat

The Gujarat Electricity Board has detected power theft of over Rs 3 crore during raids

led by GEB director (vigilance) Gurdayal Singh in the towns such as Varachha, Puna-

Khumbaria and Pandesara in the last two days. About 26 teams, comprising120 GEB

engineers and policemen, conducted the raids in industrial, commercial and residential

premises in these areas. News broadcasted on 20thJanuary, 2006 in one of the leading

news paper, however, considered it as a just a tip of the iceberg. Likewise, there were

hundreds of such raids conducted by Vigilance officers of Gujarat Electricity Board

across all over Gujarat to prevent massive power theft.24

Such power theft eventually led

to heavy energy losses to the nation.

As another important development, GEB has set up separate police stations purposefully to deal with power theft cases in

Surat, Baroda, Rajkot, Mehsana and Bhavanagar Zones. In effect, these police stations are responsible to

lodge FIR (First Information Report) against those involved in theft of power and material. Eventually, they are

accountable for its due processing. This is aimed at expediting detection of culprits and prosecuting them immediately.


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Besides, 77 Ex. Army persons have been engaged in each zone for protecting GEB staff during checking and

disconnection.

In order to conduct such detection track and timely check of the HT and LT consumers, GEB has identified theft prone

areas on the basis of consumption patterns, sensitive industries, and seasonal industries. For constant and vigilant watch

on HT consumers - main source of income for GEB, HO has arranged special facility to trace their usage along with other

relevant information through computerized consumption pattern. On the basis of this information, the mass drives have

been organized with the help of police squad for power theft detection. It is observed that industries like Engineering

Units, oil mills, cold storage, Ginning & Processing Mills, Texturing in yarn manufacturing units, Paper mills, Steel

Rolling Mills, Hotels, Commercial/Housing Complex, Diamond Cutters, etc. are often found involved in power theft

activities.

GEB has put in place a system of responsibility and accountability in the functional domain of checking, investigating,

detecting, processing and settling the power theft activities. There were specific and pre-determined targets given in terms

of percentage checking of the connections. The performance of the employees was being broadly measured by the overall

achievements of these targets.

On the basis of the checking and subsequent detection of malpractices, GEB has begun the process of sealing the

connections wherein the meter would be sealed and any tampering observed thereafter would be considered as a crime.

Some customers attempt to manipulate the meter causing it to under-register or to run backwards, effectively using power

without paying for it. They excuse this by referring to the increasing costs of energy, perceived corrupt profits or actions

of the Electricity Company, etc. This is fraud, illegal in almost all circumstances. Now, in order to protect the company

from such acts, meters are usually sealed so that the connections and mechanism cannot be

Tampered with ,without breaking the seal.GEV has set a record in sealing meters to curb tampering with the sa


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Provision of Metal Meter Boxes

Gujarat Electricity Board (GEB) has found out a number of defective meters in the due course of detection and sealing

process of the meters. Thus it has initiated a replacement of meters. As such faulty meters were generating incorrect

reading; it became quite easier even for the low-skilled lineman to tamper with it. Such replacements aided the stoppage

of power theft to the great extent.

Further Gujarat Urja Vikas Nigam Ltd.(GUVNL) has initiated reforms in metering by formulating and implementing

strict metering code. Basically, Metal Meter Boxes are used for effective energy audit and to control abrupt power theft. It

also examines the bi-directional active energy, reactive energy, currents, voltage, reactive power, frequency and other

electrical parameters. If it is laded by metal, tampering would become a difficult exercise. In addition, such MMB would

be capable to record various parameters required for a particular category of consumers on the basis of tariffs applicable to

them. As a result, it is used for better energy audit. Over the span of five years, GUVNL has almost triplicated the use of

Metal Meter Boxes (MMB).

Appellate procedure for settlement of power theft cases

In GEB the arbitrary method of dealing with consumers involved in theft and other irregularities has been well

administered. In case of theft of power and malpractice, consumers can now freely approach the appellate cell after

making payment of 20% of the amount of supplementary bill issued after found as guilty. An appellate cell is created in

each zone which decides the cases having supplementary bill amount to Rs. 3 lacs whereas at Head Office level cases

having supplementary bill amount of above Rs. 3 lacs are being trialed.

Interestingly, in order to have speedy settlement of appellate cases bearing an amount up to Rs. 3 lacs, the system of

settlement of such cases by way of joint pursuit between zonal appellate committee and consumer has been introduced.

According to this system, zonal appellate committees can straight away settle the cases on the basis of three conditions;

1. The consumer should agree to his liability to pay the dues

2. He should be capable to pay 65 % of his dues on an immediate basis and lastly,

3. It should be found acceptable to the board.

Lok Adalat


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There were large number of pending civil suits relating to power theft and malpractices. Therefore, GEB gave utmost

priority and importance to settle pending cases. To resolve, this matter, it had set up Lok Adalat and Pre-Litigation Lok

Adalats which not only helped to expedite the justice process but also aided in better revenue realization and reduction of

legal expenditure. Regular hearings were held at different places in the state exclusive


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USE OF IT FOR BETTER EFFICIENCY

Geographical Information System

As per the assumptions, it was believed that to make out data relating to power flow from meter to feeder was almost

impossible. However, this time, it was absolutely proved wrong by GIS. Now, by just a click of a mouse, it is feasible to

know where our consumer is, what is his consumption and all details relating to the power flow from meter to feeder.

The introduction of Geographical Information System (GIS) technology in power management is imperative in the long

run for detecting and monitoring power distribution. Through GIS mapping, it can be trapped on a computer screen as to

which customer/meter is connected to which pole and the quantity of power flow. The Government of India has taken up

the matter enforcing the installation of GIS countrywide to check and monitor power pilferage as per the 11th Plan

Approach paper which gives broad inputs for GIS mapping. Hence, Gujarat electricity board has introduced GIS

technology for power management initially in certain selected areas. With this, it has now become possible to easily track

the offenders. Such offenders will further be checked by anti-theft squad by

conducting surprise raids and penalizing them accordingly. Apart from this, GIS helps in acquiring information related totechnical requirements considering no. of transformers working properly, no. of new transformers required and designing

or redesigning distribution system.

In addition, GIS reduces time to attend consumers complaints of NO power, minimize time to give new connections,quick fault analysis and identification of low voltage in specified areas. Currently, GIS is operational at Baroda,

Bhavnagar and Jamnagar while in Junagadh, Rajkot, Ankleshwar and in Bharuch, GIS installation is in work-in-progress.Gradually, Government of Gujarat is planning to introduce GIS mapping in all over Gujarat.


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SIGNIFICANT IMPROVEMENT IN CASH COLLECTION

Cash collection has been a major headache for the electricity boards all over India. With the introduction of stringent

measures to achieve operational efficiency and reduction of technical and commercial losses especially in power pilferage

a brave effort was required to realize the dues of the consumers on speedily and timely basis. Utilization of information

technology or specifically speaking Global Information System (GIS) (Restricted to only Baroda, Bhavnagar, Jamnagar,

Rajkot, Surat, Mehsana, Anand, Bharuch and Junagadh City) has enabled to set up

1.

spot billing with handheld machines,

2. online data monitoring

3. Connection between head office (HO) and other divisions through Wide Area Network (WAN).

In rural areas, post offices were assigned the duty of doorstep collection of bill amount. (9000 post offices were assigned

the task of collecting bills). Additionally, 1000 cash collection windows of GUVNL were set up to improve its collection

efficiency.

Billing activities of Gujarat Electricity Board have been outsourced to private agency manned by experts in billing

functions in order to reduce the cost of operation and attain greater efficiency and precision in all billing activities. GEB

pursued the initiative of pilot project outsourcing the billing activity and accorded its approval to it for LT Consumers of

all sub-divisions of Rajkot City, Jamnagar City and 3 Sub-Divisions of Surat Circle.

HUMAN RESOURCE MANAGEMENT IN GEB

Organizational restructuring has its own challenges in the corporate world. With the unbundling of GEB into separate

entities on functional basis, the most crucial threat was smooth transition in terms of human resource management from

Board to Companies. In 2003-04, GEB had entered into tripartite agreement with Employees Union and State


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Government whereby the modalities of transferring employees to the successor entities due to enactment of Electricity

Act, 2003 and Organizational Restructuring (unbundling) were decided and later on implemented successfully.

In fact, the employees were given several options relating to selection of entity, of workplace and were given time of six

months for the same. A detailed communication exercise was undertaken by top management with each individual

employee on regular basis. However, change of organization, name and location never guaranteed the change in working

style, culture and efficiency. In order to facilitate the employees to adapt an easy change, GEB had undertaken thorough

training programme for employees in transformation management.

GEB is such an organization where on an average 48,000 employees have been working since 1994-95 and catering

services to millions of consumers. If we look at the manpower status and their efficiency, we will find mainly four trends .

Manpower Efficiency

Post reformation of the GEB the number of customers per employee has increased drastically, however so has the revenue

per employee which is hence an indicators of better utilization of human assets and rise in efficiency of GEB.


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Training and Development of Employees

In an electricity company, training requirements are highly diversified since a number of functional units exist manned by

varied kind of people. The major thrust areas of the training of GEB employees have been consumer orientation, team and

leadership skills, tariff structure analysis, financial training for non-finance executives and simulator training. Generally,

the training period for all such areas was for 3 to 5 days. In FY 2003-04 and 2004-05, nearly 13000 and 16,443 employees

respectively were trained in the above stated areas which made half of the workforce highly skilled in their respective

areas of operation. In addition, GEB is developing Management Development Institute at Gotri, Baroda which will be

operational by the end of 2006.


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RURAL ELECTRIFICATION

Rural electrification has remained the major constraint for overall rural development of India in general. However,

Gujarat has spent a good quantum of efforts to tide over the problem of sluggish rural electrification. Actually, rural

electrification refers to the process of electrification of rural hamlets, agriculture wells/tube wells, Schedule Caste and

Dalit localities. The programme of rural electrification is by and large carried out by the respective state electricity board,notwithstanding financial supports, being provided by Rural Electrification Corporation Ltd. a central government

company under Ministry of Power mandated to provide financial support for rural electrification throughout India.

In Gujarat, according to Census, 2001 total number of villages in Gujarat are 18544. Currently, the total number of

villages electrified stands at 17940. It clearly demonstrates that 96.74 % villages are completely electrified.The remaining

604 villages are non feasible on account of either going submergence under various dam projects, or having no population

at present or lying under thick and reserved forest area declared by the Central Government.

However, rural electrification doesnt mean merely providing power lines to the rural dwellings. It invariably includes

continuous power supply at the required voltage and frequency since the quality of villagers life could beaffected due to

non availability of power supply in rural areas. In order to provide continuous three phase power supply to rural areas for

development of rural population and increase in their standards of living, Government of Gujarat has introduced a unique

scheme named JYOTI GRAM YOJANA(JGY)36

. This has affected the villages in development of Education,

Industries, Business, and Health Services etc. All round development of State can be achieved by providing 24 Hrs. power

to rural areas. Thus, JGY scheme envisioned making the life of millions of village people happier, progressive and

prosperous by ensuring quality power supply.

Under Jyotigram Yojana nearly 12,500 villages of Gujarat have been covered. The main feature of JGY is the segregation

of agricultural load from existing rural feeders which were provided power supply to bothagricultural area and rural

hamlets. Now, these feeders are supposed to facilitate electricity supply to only agricultural area. New feeders have been

laid down to cater loads of villages. In those villages nearly 31,589 kms of 11 KV network was laid down and 6124

transformers centers were erected. In common parlance, such wide network and large number of transformers have been

set up to install separate distribution line of 11 KV catering the power supply requirements of only rural areas. In addition

in order to maintain support to such distribution lines, 3429 Kms. Of LT (Low Tension) network was laid down. Total

cost of the whole project was Rs. 681.34 Crores


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Benefits visualized under JGY

Such a unique scheme bears several advantages in addition to continuous power supply to rural population such as

providing more opportunities of local employment, development of cottage/home industries & small scale industries,provision of better health services & infrastructure facilities. Now, onwards the power supply will be available to villagers

at the peak of an hour. It will help students for computer education & for preparing other examinations. It may seem very

odd; however, we can not deny the fact that rural housewives will be able to use electrical appliances like, grinder, mixers,

fridge, etc. and thus improve their standards of living. Moreover, continuous power supply will aid rural population to

satisfy their entertainment needs in a better way since TV, VCR, VCD & local/ national/inter national news/entertainment

channels will be available which in turn would uplift the village environment. Last but not the least, migration from rural

to urban areas will be reduced because of better employment, education and entertainment in rural areas.


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Taking into account the fact that GEB had almost lost the chances to make a quick transformation, a timely help by

Government of Gujarat in form of lenient approach concerning the recovery of interest payment has proven to be a piece

of cake for GEB.

RESULTS ACHIEVED DUE TO REFORMS OF GUJARAT ELECTRICITY BOARD

Apart from outcomes and achievements mentioned earlier, the Board has made rapid strides in the following areas of

operations which led to a historical transformation of a public sector unit.

a. Reduction in T & D losses

On account of continuous efforts of GEB officials to cut down the transmission and distribution losses, the board was able

to achieve significant improvement in plant load factor over the past few years. Here, Plant load factor is the measure of

efficiency of a power plant.. The load factor is the ratio between the energy that a power plant has produced over a

considerate period and the energy that it could have produced at maximum capacity under continuous operation during the

whole period.

The load factor is appropriate as a performance indicator for power plants as far as they are used exclusively for base load

operation. GEB has continuously strived to enhance its PLF.

The increase in plant load factor, change of obsolete equipments, cut in power theft and better energy audit resulted in the

increase of transmission and distribution efficiency and reduction of nearly 5 % to 9 % in overall transmission and

distribution losses. It is evident that T&D losses are declining and its declining growth rate is amplifying every year.

b. Increase in sales of electricity

Gujarat Electricity Board has made a quantum jump in terms of sales over the span of four years starting from FY 2000-01 to 2003-04. Figure21 reveals the trend of rising level of customer base which was lengthened due to increase indemand of electricity, massive rural electrification efforts, identification of unauthorized connections and subsequentregistration of the same connections as customers and renewed thrust of controlling the power theft. At last, over the fouryear, the consumer base of GEB has been expanded at the compound annual growth rate of 2.48 %.


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c. Improvement in Financial Performance

Financial performance is the vital indicator of efficiency in an organization.

Financial health of erstwhile GEBwas in doldrums since last decade especially, after 1997-98.38. Earlier than financial year 1998-99, revenue deficit or

financial loss hardly appears on the balance sheet of GEB. Situation was worsened since 1998-99 when the losses ofaggregating Rs. 3834.7 Crore were came into view. It went on increasing due to higher operating cost and lower operatingrevenue. It reached to Rs. 2542.9 Crore in 2000-01. Major reasons for higher operating costs were surmounting

transmission and distribution losses due to increasing power theft by HT/LT consumers, low collection efficiency,technological obsolesce and lack of political will to bring the culprits to the book. In fact, its assets (fixed assets as well as

current assets) have been mostly financed by funds, contribution, grants and subsidies from state government or centralgovernment. Their capital liabilities and payment due on them have been surmounting year-on-year basis. In fact, it has

been borrowing money to finance its working capital.On the other hand, its receivables against supply of power have been heavily accumulated. In short, it was totally in lost.However, these trends were eye-opener for the policy makers; few of them took up the reins to correct the situation and

chart out the road map to reform GEB. They took stern steps to wipe out lost from the revenue statement of theorganization. They successfully implemented all the strategies right from the unbundling of GEB, its subsequent

corporatisation, campaign against power theft, introduction of IT Tools to massive rural electrification programme byintroducing Jyoti Gram Yojana. As an effect, surprisingly, they have generated profit of nearly Rs. 200 Crores in theFinancial Year 2005-06, that too, without increase in tariffs by a single penny. Although the strategies and needs for

reforms have been mentioned earlier, I reiterate the fact that political will of the visionary politicians, administrativeacumen, precision of working and cooperation of all officialsright from a lineman to M.D.as well as overallsupportive environment by Government of Gujarat has converted this nearly impossible task into a reality.


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CONCLUSION

Reformation of erstwhile Gujarat Electricity Board which is now, Gujarat Urja Vikas Nigam Ltd (GUVNL) has become a

feather in the cap of Panchamrit- Gyan Sakti (Education), Raksha Sakti (Defence), Jal Sakti (Water resources), Urja

Sakti (Electric

Documents

Strategy Management - Gujrat Electricity Board